Controversy around the PCI DSS compliance program increased recently when Robert Carr, the CEO of Heartland Payment Systems, in an article in CSO Online, attacked his QSAs saying, "The audits done by our QSAs (Qualified Security Assessors) were of no value whatsoever. To the extent that they were telling us we were secure beforehand, that we were PCI compliant, was a major problem."

Mike Rothman, Senior VP of eIQNetworks responded to Mr. Carr's comments not so much to defend PCI but to place PCI in perspective, i.e. compliance does not equal security. I discussed this myself in my post about the 8 Dirty Secrets of IT Security, specifically in my comments on Dirty Secret #6 – Compliance Threatens Security.

Eric Ogren, a security industry analyst, continued the attack on PCI in his article in SearchSecurity last week where he said, "The federal indictment this week of three men for their roles in the
largest data security breach in U.S. history also serves as an
indictment of sorts against the fraud conducted by PCI – placing the
burden of security costs onto retailers and card processors when what
is really needed is the payment card industry investing in a secure
business process."

The federal indictment to which Eric Ogren referred was that of Albert Gonzalez and others for the breaches at Heartland Payment Services, 7-Eleven, Hannaford, and two national retailers referred to as Company A and Company B. Actually this is the second federal indictment of Albert Gonzalez that I am aware of. The first, filed in Massachusetts in August 2008, was for the breaches at BJ's Wholesale Club, DSW, OfficeMax, Boston Market, Barnes & Noble, Sport Authority, and TJX.

Bob Russo, the general manager of the PCI Security Standards Council disagreed with Eric Ogren's characterizations of PCI, saying that retailers and credit card processors must take responsibility for protecting cardholder information.

Rich Mogull, CEO and Analyst at Securosis, responded to Bob Russo's article with recommendations to improve the PCI compliance program which he characterized as an "overall positive development for the state of security." He went on to say, "In other words, as much as PCI is painful, flawed, and ineffective, it
has also done more to improve security than any other regulation or
industry initiative in the past 10 years. Yes, it's sometimes a
distraction; and the checklist mentality reduces security in some environments, but overall I see it as a net positive."

Rich Mogull seems to agree with Eric Ogren that the credit card companies have the responsibility and the power to improve the technical foundations of credit card transactions. In addition, he calls the PCI Council to task for such issues as:

incomplete and/or weak compliance requirements

QSA shopping

the conflict of interest they created by allowing QSA's to perform audits and then sell security services based on the findings of the audits.

Clearly organizations have no choice but to comply with mandatory regulations. But the compliance process must be part of an overall risk management process. In other words, the compliance process is not equal to the risk management process but a component of it.

Finally, and most importantly, the enterprise risk management process must be more agile and responsive to new security threats than a bureaucratic regulatory body can be. For example, it may be some time before the PCI standards are updated to specify that firewalls must be able to work at the application level so all the the Web 2.0 applications traversing the enterprise network can be controlled. This is an important issue today as this has been a major vector for compromising systems that are then used for funds transfer fraud.